By Nate Raymond
BOSTON (Reuters) – Democratic attorneys general from 22 U.S. states filed a lawsuit on Monday challenging sharp cuts to federal grant funding for universities, medical centers and other research institutions by President Donald Trump’s administration.
The lawsuit, filed in federal court in Boston, takes aim at cuts adopted by the National Institutes of Health – due to take effect on Monday – to the reimbursement rate for the indirect costs to research institutions that are not directly related to a scientific project’s goals. Indirect costs include laboratory space, faculty, equipment and infrastructure.
The lawsuit, which accuses the NIH of exceeding its authority and of violating federal law, is being led by the attorneys general of Massachusetts, Illinois and Michigan.
The Trump administration on Friday said it was capping the rate it would reimburse those indirect costs at 15%, down from an average of about 27% to 28%. The NIH policy is one piece of Trump’s wide-ranging actions since returning to the presidency on January 20 aimed at slashing certain federal spending and dismantling parts of the U.S. government.
The U.S. Department of Health and Human Services, which oversees the NIH, had no immediate comment.
The NIH said it spent more than $35 billion in the 2023 fiscal year on grants awarded to researchers at more than 2,500 institutions.
About $9 billion of that money went to covering overhead and an institution’s indirect costs, the NIH said.
The NIH in a post on social media on Friday said the change would save the federal government $4 billion annually. It said that three schools that had charged more than 60% – Harvard University, Yale University and Johns Hopkins University – possessed multi-billion dollar endowments.
The state attorneys general said if allowed to stand, NIH’s action would result in layoffs, research disruptions and laboratory closures.
The lawsuit is seeking a court order preventing the NIH from implementing the cuts, which it says violate language attached to funding legislation passed by Congress since 2018 that bars the NIH from making such a rate change without proper authorization. That language was adopted after Trump’s first administration in 2017 proposed capping the indirect rate at 10%.
The lawsuit also accuses the NIH of exceeding its authority by making the cuts apply retroactively to existing federal grants and of adopting the policy without following mandatory rulemaking procedures.
Harvard in a statement on Monday said the cuts would “slash funding and cut research activity at Harvard and nearly every research university in our nation.” Yale and Johns Hopkins did not immediately respond to requests for comment.
(Reporting by Nate Raymond in Boston; Editing by Mark Porter and Will Dunham)
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